Investors sceptical of property market newcomer

Investors are being warned against giving money to a new company promising to get people on the property ladder for as little as $500.

The Ownery aims to give people a chance to invest in "the sort of houses that they aspire to buy as their first home", tying their savings to the Auckland housing market.

The main drawcard is making a capital gain, but dividends are also on offer after the Ownery's own fees, rates, insurance and maintenance costs are deducted.

Auckland Property Investors Federation vice-president Peter Lewis says going down that route could become rather complicated, and there's unlikely to be much money left over, if any.

"They will be charging a healthy professional fee for that, which is fair enough, but I can't see there would be a particularly great surplus on the income stream for the people who actually own the units," he says.

The capital gain itself would also be subject to tax.

"You would obviously still make a profit hopefully over the whole exercise, but you need to be aware that that profit will be taxable at the time that you get it," says Mr Lewis.

"If you are looking for a capital gains exercise, then you are possibly going to be better off getting into something else that's going to be a bit more transparent."

Mr Lewis suggests if you can't afford a house deposit, you're better pitching in with friends than investing in a third party. He suggests looking at areas such as south Auckland, where house prices are still cheaper than the rest of the city.

Recent data shows the vast majority of houses being bought in south Auckland are being snapped up by investors -- as high as 80 percent in some suburbs.

"We know that there are thousands of young families desperate for housing security, but can't afford it because they can't outcompete the investors," says Green Party co-leader Metiria Turei.

Across the entire city, 41 percent of properties go to investors rather than owner-occupiers.